TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER 57 TO TITLE 33, SO AS TO ENACT THE "SOUTH CAROLINA EDUCATION LOTTERY ACT"; TO PROVIDE FOR A STATE LOTTERY AND TO CREATE THE SOUTH CAROLINA EDUCATION LOTTERY CORPORATION TO CONDUCT THE STATE LOTTERY; TO PROVIDE FOR THE CORPORATION'S BOARD MEMBERSHIP, DUTIES, AND POWERS; TO PROVIDE FOR THE CREATION OF A LOTTERY RETAILERS ADVISORY COMMITTEE; TO PROVIDE FOR THE METHOD OF CONTRACTING WITH VENDORS AND RETAILERS; TO PROVIDE FOR THE SALE OF LOTTERY GAME TICKETS AND THE DISTRIBUTION OF PRIZES; TO PROVIDE FOR ALLOCATION OF LOTTERY PROCEEDS WHICH MUST BE USED FOR EDUCATIONAL PURPOSES AND PROGRAMS; TO PROVIDE CRIMINAL PENALTIES FOR SELLING A LOTTERY TICKET TO A MINOR, PURCHASING A LOTTERY TICKET AS A MINOR, AND DEFRAUDING OR OTHERWISE TAMPERING WITH THE LOTTERY OR MAKING MATERIAL REPRESENTATIONS IN AN APPLICATION OR REPORT IN CONNECTION WITH THE LOTTERY; TO CREATE A SOUTH CAROLINA EDUCATION LOTTERY OVERSIGHT COMMITTEE; TO PROVIDE FOR SET-OFF DEBT COLLECTION FROM PRIZE WINNINGS; TO ESTABLISH THE SOUTH CAROLINA EDUCATION LOTTERY ACCOUNT INTO WHICH THE NET PROCEEDS RECEIVED FROM THE STATE EDUCATION LOTTERY MUST BE DEPOSITED AND TO PROVIDE FOR SPECIFIED PURPOSES FOR THE PROCEEDS; TO AMEND SECTION 1-3-240, RELATING TO THE REMOVAL OF OFFICERS BY THE GOVERNOR UNDER CERTAIN CIRCUMSTANCES, SO AS TO ADD THE SOUTH CAROLINA EDUCATION LOTTERY CORPORATION TO THAT PROVISION; TO ADD SECTION 2-15-63, SO AS TO PROVIDE THAT BEGINNING IN DECEMBER 2004 AND EVERY THREE YEARS THEREAFTER, THE LEGISLATIVE AUDIT COUNCIL MUST CONDUCT A MANAGEMENT PERFORMANCE AUDIT OF THE LOTTERY CORPORATION; TO AMEND SECTION 12-36-2120, RELATING TO THE EXEMPTIONS FROM THE SALES TAX, SO AS TO INCLUDE THE SALE OF A LOTTERY TICKET; AND TO AMEND SECTION 59-63-210, RELATING TO THE GROUNDS FOR WHICH A STUDENT MAY BE EXPELLED, SO AS TO PROVIDE THAT NO STUDENT UNDER EIGHTEEN YEARS OF AGE WHO UNLAWFULLY PURCHASES A LOTTERY TICKET MAY BE EXPELLED FOR THAT REASON ONLY.

Amend Title To Conform

Be it enacted by the General Assembly of the State of South Carolina:

SECTION 1. The General Assembly finds that:

(1) net proceeds of lottery games conducted pursuant to this chapter must be used to support improvements and enhancements for educational purposes and educational programs as provided by the General Assembly and that the net proceeds must be used to supplement, not supplant, existing resources for educational purposes and programs;

(2) lottery games are an entrepreneurial enterprise and that the State shall create an instrumentality of the State and public body, corporate and politic, known as the South Carolina Lottery Commission, with the comprehensive and extensive powers as generally exercised by commissions engaged in entrepreneurial pursuits;

(3) lottery games must be operated and managed in a manner which ensures that the lottery is operated with integrity and dignity and free of political influence, maximizes the use of revenues, and provides continuing entertainment to the public;

(4) the South Carolina Lottery Commission must be accountable to the General Assembly and to the public through a system of audits and reports; and

(5) this act is not a bill appropriating money out of the State Treasury as contemplated by Section 21 of Article IV of the Constitution of this State and, therefore, is not subject to a line item or section objection or veto by the Governor. It is the intent of the General Assembly that this act merely specify the educational purposes and programs, and parameters, for funding by the General Assembly through the annual general appropriations bill or any bill appropriating monies for previous or current fiscal years.

SECTION 2. Title 59 of the 1976 Code is amended by adding:

"CHAPTER 150

South Carolina Education Lottery Act

Section 59-150-10. This chapter may be cited as the 'South Carolina Education Lottery Act'.

Section 59-150-20. As used in this chapter:

(1) 'Administrative expenses' means operating expenses, excluding amounts set aside for prizes, regardless of whether the prizes are claimed, and excluding amounts held as a fidelity fund pursuant to Section 59-150-170.

(2) 'Board' means the board of commissioners of the South Carolina Lottery Commission.

(5) 'Executive director' means the executive director of the South Carolina Lottery Commission or his designee.

(6) 'Immediate family' means a person who is:

(a) a spouse;

(b) a child residing in the same household; or

(c) claimed as a dependent for income tax purposes.

(7) 'Lottery', 'lotteries', 'lottery game', or 'lottery games' means a game of chance approved by the General Assembly and operated pursuant to this chapter including, but not limited to, instant tickets, on-line lottery games and drawing numbers but excluding keno, pari-mutuel betting, and casino gambling as defined in this section. A lottery game may not exceed the price of one dollar for one play. The operation of the lottery games excludes machines and lottery games, including video poker lottery games, prohibited by Sections 12-21-2710, 16-19-40, and 16-19-50. The access and use of an electronic or mechanical machine designed for a lottery game authorized pursuant to this chapter must be limited to a lottery retailer and his employees only in order to facilitate retail sales of lottery tickets, and such a machine must not dispense anything other than lottery tickets.

As used in this item, 'casino gambling' means a location or business for the purpose of conducting unlawful gambling activities, but excluding the sale and purchase of lottery game tickets or shares; and 'pari-mutuel betting' means a method or system of wagering on actual races including races involving horses or dogs at tracks and the distribution of winnings by pools.

(8) 'Lottery retailer' means a person who sells lottery game tickets or shares on behalf of the South Carolina Lottery Commission pursuant to a contract.

(9) 'Lottery vendor' means a person who provides or proposes to provide goods or services to the South Carolina Lottery Commission pursuant to a procurement contract, but does not include an employee of the commission, a lottery retailer, or a state agency or instrumentality of the State. The term includes a corporation whose shares are traded publicly and which is the parent company of the contracting party in a procurement contract.

(10) 'Major procurement contract' means a gaming product or service costing in excess of seventy-five thousand dollars including, but not limited to, major advertising contracts, annuity contracts, prize payment agreements, consulting services, equipment, tickets, and other products and services unique to the South Carolina lottery but not including materials, supplies, equipment, and services common to the ordinary operations of a business.

(11) 'Member' or 'members' means a commissioner or commissioners of the board of the South Carolina Lottery Commission.

(12) 'Minority business' means a business which meets the definition of a socially and economically disadvantaged small business as described in Article 21, Chapter 35, Title 11, specifically a small business concern which:

(a) is at least fifty-one percent owned by one or more citizens of the United States who are determined to be socially and economically disadvantaged;

(b) in the case of a concern which is a corporation, at least fifty-one percent of all classes of voting stock of such corporation is owned by an individual determined to be socially and economically disadvantaged; or

(c) in the case of a concern which is a partnership, at least fifty-one percent of the partnership interest is owned by an individual or individuals determined to be socially and economically disadvantaged or whose management and daily business operations are controlled by individuals determined to be socially and economically disadvantaged. Those individuals must be involved in the daily management and operations of the business concerned.

'Small business' as used in this item means a business which meets the definition of a small business for purposes of the Small Business Administration, an agency of the United States.

(13) 'Net proceeds' means all revenue derived from the sale of lottery game tickets or shares and all other monies derived from the lottery games, less operating expenses and prizes.

(14) 'Operating expenses' means all costs of doing business including, but not limited to, prizes, commissions, and other compensation paid to a lottery retailer, advertising and marketing costs, rental fees, personnel costs, capital costs, depreciation of property and equipment, funds for compulsive gambling education and treatment, amounts held in or paid from a fidelity fund pursuant to Section 59-150-170, and other operating costs, including funds to the Commission on Higher Education and the Administrative Law Judge Division toward their expenses incurred in performance of their duties pursuant to this chapter.

(16) 'Prize' means an award, gift, or anything of value regardless of whether there are conditions or restrictions attached to its receipt.

(17) 'Proceeds' means all lottery revenue derived from the sale of lottery game tickets or shares and all other monies derived from the lottery or received by the commission.

(18) 'Share' means an intangible interest in a lottery ticket, by way of assignment, contractual participation, or other claim or right, subject to proof.

(19) 'Ticket' means tangible evidence issued by the South Carolina Lottery Commission to provide participation in a lottery game.

(20) 'Panel' means the House and Senate members appointed by the President Pro Tempore of the Senate and the Speaker of the House of Representatives pursuant to the provisions of Section 59-150-40(B)(5).

Section 59-150-30. (A) There is created a commission to be known as the South Carolina Lottery Commission, which is deemed to be a public commission and an instrumentality of the State. The commission and its employees are subject to the South Carolina Consolidated Procurement Code, South Carolina Administrative Procedures Act, South Carolina Ethics Reform Act, and South Carolina Freedom of Information Act. Venue for the commission is in Richland County.

(B) Beginning in December 2004 and every three years after that, or by the request of five members of the House of Representatives or five members of the Senate, the Legislative Audit Council shall conduct a management performance audit of the commission. The cost of this audit is an operating expense of the commission.

(C) Jurisdiction for investigation of allegations of criminal violations and for enforcement of criminal penalties for violations of the provisions of this chapter lies with the Statewide Grand Jury.

Section 59-150-40. (A) The commission is governed by a board composed of nine members to be appointed as follows: three members must be appointed by the Governor, three members must be appointed by the President Pro Tempore of the Senate, and three members must be appointed by the Speaker of the House of Representatives.

(B) A member must:

(1) be a resident of the State of South Carolina;

(2) not have been convicted of a felony offense or bookmaking or other form of unlawful gambling. A background investigation must be conducted on each board nominee. The commission shall pay for the cost of the investigation and may contract with the State Law Enforcement Division (SLED) or appropriate federal agency for the performance of the investigation;

(3) meet the qualifications for electors as provided in Section 7-5-120;

(4) not have been an elected public official, as provided in Section 24, Article III, of the Constitution of this State and Section 2-1-100, for at least two years before appointment; and

(5) have been screened by a panel pursuant to procedures it establishes and found by the panel to meet the statutory qualifications and considerations for appointment to the board. The Governor, Speaker of the House of Representatives, and the President Pro Tempore of the Senate each shall submit the names of his potential board appointees to the panel. If the panel finds the potential appointee meets or does not meet the statutory qualifications, it shall notify the appointing authority who submitted the name. A potential appointee found not statutorily qualified by the panel may not be appointed to the board. The screening panel is composed of ten members: five selected by the President Pro Tempore of the Senate and five selected by the Speaker of the House of Representatives. The President Pro Tempore of the Senate and the Speaker of the House of Representatives shall each select three members of their respective bodies and two members from the public to serve on the screening panel. The members of the panel serve four-year terms. The investigation and consideration by the panel of a potential appointee is limited to the statutory qualifications established pursuant to this chapter. A panel member may be removed upon unanimous vote of the appointing authorities, or for cause by his appointing authority for malfeasance, incompetency, conflict of interest, misconduct, persistent neglect of duty in office, or incapacity.

(C) In making appointments to the board, the Governor, the President Pro Tempore of the Senate, and the Speaker of the House of Representatives, as appropriate, shall consider legal, financial, accounting, and marketing experience and race, gender, and other demographics factors to ensure nondiscrimination, inclusion, and representation of all segments of the State to the greatest extent possible.

(D) The members shall serve terms of three years, except that of the initial appointments the Governor shall appoint two members, each to serve a two-year term, and one member to serve a four-year term; the Speaker of the House of Representatives shall appoint three members, each to serve a two-year term, co-terminus with the Speaker; and the President Pro Tempore of the Senate shall appoint three members, each to serve an initial four-year term. A vacancy that occurs on the board must be filled by appointment by the Governor, the President Pro Tempore of the Senate, or the Speaker of the House of Representatives, as appropriate, for the remainder of the unexpired term.

(E) A member shall not serve on the board if he is an officer or employee of the commission or if he has an immediate family member employed by the commission.

(F) A member of the board may receive per diem, subsistence, and mileage at the rate provided by law for members of state boards, committees, and commissions.

(G) The board shall elect from their membership officers of the board, including the chair.

(H) The board may delegate to the executive director of the commission those powers and duties it considers proper.

(I) A majority of members in office or at least five members, whichever is greater, constitutes a quorum for the transaction of business and for the exercise of a power or function of the commission.

(J) Action may be taken and motions and resolutions adopted by the board at a board meeting by affirmative vote of a majority of present and voting board members. This subsection does not relieve the board from the requirements of the South Carolina Freedom of Information Act.

(K) A vacancy in the membership of the board does not impair the right of the members to exercise all the powers and perform all the duties of the board.

(L) A member is appointed to the board for a term, but serves at the pleasure of the official who appointed him.

(M) A member of the board shall not contribute to the campaign of a candidate for the General Assembly or a statewide constitutional office; to a political party, as defined in Section 8-13-1300(26); or to a committee, as defined in Section 8-13-1300(6); or make an independent expenditure to advance or defeat a measure related to the lottery.

Section 59-150-50. The board shall:

(1) approve, disapprove, amend, or modify the budget recommended by the executive director for the operation of the commission;

(2) approve, disapprove, amend, or modify the terms of procurements recommended by the executive director;

(3) hear appeals of hearings required by this chapter;

(4) promulgate regulations and adopt policies and procedures regulating the conduct of lottery games pursuant to the Administrative Procedures Act and as specified in Section 59-150-60(A)(19); and

(5) perform other functions specified by this chapter.

Section 59-150-60. (A) The commission has all the powers necessary or convenient to carry out and effectuate the purposes and provisions of this chapter which are not in conflict with the Constitution and laws of this State and which generally are exercised by commissions engaged in entrepreneurial pursuits on behalf of the State including, but not limited to, the powers to:

(1) sue and be sued in contract and in tort and to complain and defend in all courts, subject to the South Carolina Tort Claims Act;

(2) adopt and alter a corporate seal and symbol;

(3) promulgate regulations and adopt policies and procedures for the regulation of its affairs and the conduct of its business; to elect and prescribe the duties of officers and employees of the commission; and to perform other matters as the commission may determine;

(4) procure or to provide self-insurance;

(5) hold copyrights, trademarks, and service marks and enforce its rights with respect to them;

(6) organize, initiate, supervise, and administer the operation of the lottery as provided by this chapter and regulations promulgated and policies and procedures adopted pursuant to this chapter;

(7) enter into written agreements with one or more other states for the operation, participation in marketing, and promotion of a joint lottery or joint lottery games, but such marketing and promotion is subject to the restrictions on advertising and promotion provided in item (17) of this section;

(8) conduct necessary or appropriate market research, which may include an analysis of the demographic characteristics of the players of the lottery game and an analysis of advertising, promotion, public relations, incentives, and other aspects of communication;

(9) acquire or lease real property and make improvements on it and acquire by lease or by purchase personal property including, but not limited to, computers; mechanical, electronic, and on-line equipment and terminals; and intangible property including, but not limited to, computer programs, systems, and software. To achieve cost savings and efficiency, the commission shall use the telecommunications network service of the Budget and Control Board's Office of Information Resources pursuant to Sections 1-11-430 and 11-35-1580 provided that the commission certifies that the service is secure;

(10) administer oaths, take depositions, issue subpoenas, and compel the attendance of witnesses and the production of books, papers, documents, and other evidence relative to any investigation or proceeding conducted by the commission;

(11) appoint, select, or hire officers, agents, and employees, including professional and administrative staff, personnel, and hearing officers to conduct hearings required by this chapter, and to fix their compensation and pay their expenses. Notwithstanding another provision of law, the commission has exclusive authority to contract for legal services. All employees of the commission are employees-at-will and are eligible for participation in the South Carolina Retirement System and may elect optional retirement program coverage in the same manner as provided in Section 9-20-10(2)(a), the State Health Insurance Group plans, and are encompassed by the South Carolina Tort Claims Act;

(12) make pension payments to the South Carolina Retirement System or other system approved by the State Retirement System and pay contributions to the Office of Insurance Services for dental and health plans on behalf of personnel or employees employed by the commission who qualify in the same manner as other state employees in the executive branch of government;

(13) select and contract with lottery vendors and lottery retailers;

(14) enter into contracts or agreements with state or other law enforcement agencies for the performance of law enforcement, background investigations, and security checks;

(15) enter into contracts on such terms and conditions as the commission may determine, except that the commission shall not enter into contracts to incur debt in its own name or enter into financing agreements with the State, agencies, or instrumentalities of the State, or with a commercial bank or credit provider; however, necessary start-up monies may be borrowed from the Insurance Reserve Fund of the Budget and Control Board, subject to the loan repayment terms of the Budget and Control Board, for effectuating its purpose, including payment of the initial expenses of initiation, administration, and operation of the commission and the lottery, if and only if sufficient start-up monies are not appropriated from the general fund;

(16) enter into contracts of any type on the terms and conditions the commission determines, except that it may not enter into a contract with an entity for the purpose of having that entity assume or otherwise undertake the organization and conduct of the lottery;

(17) advertise and promote the lottery and lottery games in a dignified manner befitting the State, but only in compliance with the same state and federal standards of truth in advertising which govern private advertisers engaged in interstate commerce and including the restrictions described in this item. The board shall review, at least quarterly, all past lottery advertising and proposed concepts for major media campaigns to ensure that the advertising did not and does not target with the intent to exploit specific ethnic groups or economic classes of people, and that the content is accurate and not misleading. The commission shall promote fair and responsible play, including disclosure of the odds of winning, and shall ensure that any advertising used does not exhort the public to bet by misrepresenting, directly or indirectly, a person's chance of winning a prize. The commission may use interviews, pictures, or statements from people who have won lottery prizes to show that prizes are won and awarded. If the board finds that advertising conflicts with these policies, the board shall cause the cessation of that advertising;

advertising and promotion of the lottery and lottery games as defined in Section 59-150-20(7) is restricted to: expenditure of not more than one-half of one percent of gross lottery revenues; contracts of one year or less and awarded by the board after competitive bidding; information about how the game is played; identification of amounts or recipients, or both of them, of funding from the proceeds of ticket sales; explanation of the permitted uses of lottery proceeds; probability of winning and losing; an entertainment context; encouragement of responsible play; information about recognizing and seeking treatment for compulsive gambling; sites and methods designed to reach the responsible adult player; and advertisements and promotions placed exclusively by the commission in newspapers or periodicals or on the commission official web site;

advertising and promotion of the lottery and lottery games must not include: inducements to play; targeting with the intent to exploit specific ethnic groups or economic classes of people; representations of the game as an investment or the answer to financial concerns; exaggeration of odds of winning; the name or image, or both, of an elected official, or the State Seal or its likeness; praise of a lottery player or denigration of a nonplayer; implication that the game is one of skill; suggestion that the lottery player is contributing money for the good of the State; any advertising outside of the lottery retailer's business premises; and advertising in connection with or at the site of a public school or institution of higher learning or sponsorship of an activity at a public school or institution of higher learning;

lottery advertising and promotion also: must include posting of warnings of the dangers and risks of gambling, and the odds of winning, on a three by two foot sign in a conspicuous location in all lottery retailer facilities; must otherwise encourage responsible decision making regarding lottery play by adults, discourage abusive use of the lottery product; and, other than as permitted in the provisions of this chapter for the commission and the lottery retailer, may not be undertaken by another entity or individual;

notwithstanding any other provision of law, advertising relating to the lottery must not contain subliminal messages or images of any kind;

(18) act as a lottery retailer, conduct promotions which involve the dispensing of lottery game tickets or shares, and establish and operate a sales facility to sell lottery game tickets or shares and related merchandise, except that the commission shall not establish, operate, or authorize a lottery sales facility at any state Welcome Center or state rest area; and

(19) promulgate regulations and adopt and amend policies and procedures as necessary to carry out and implement its powers and duties, organize and operate the commission, regulate the conduct of lottery games as defined in Section 59-150-20(7), and other matters necessary or desirable for the efficient and effective operation of the lottery for the convenience of the public. The promulgation of the regulations and adoption of the policies and procedures are subject to the requirements of the Administrative Procedures Act.

(B) The powers enumerated in subsection (A) are cumulative of and in addition to those powers enumerated elsewhere in this chapter, and do not limit or restrict other powers of the commission.

(C) The commission is prohibited from distributing monies other than as prescribed by this chapter including, but not limited to, the prohibition of contributing to the campaign of a candidate for the General Assembly or a statewide constitutional office; to a political party, as defined in Section 8-13-1300(26); or to a committee, as defined in Section 8-13-1300(6); and the prohibition of making an independent expenditure to advance or defeat a measure related to the lottery.

(D) The commission is not authorized to use any machine specifically prohibited by Sections 12-21-2710, 16-19-40, and 16-19-50.

(E) The commission is subject to the limitations upon, and exemptions from, liability and damages provided in the South Carolina Tort Claims Act.

(F) The commission shall not issue, sell, or authorize the sale of lottery tickets or shares at a location licensed to provide deferred presentment services pursuant to Chapter 39 of Title 34.

(G) The commission shall not enter into a contract for the purpose of influencing a political decision in connection with the operation of the lottery, and the commission may not employ, contract with, or otherwise authorize a lobbyist, as defined in Section 2-17-10(13), to engage in lobbying, as defined in Section 2-17-10(12), on behalf of the commission.

(H) The commission may not sell or give away tickets for promotional purposes.

Section 59-150-70. In accordance with the Administrative Procedures Act, the board may promulgate regulations and adopt policies and procedures regulating the conduct of lottery games in general; except the commission may promulgate temporary regulations and adopt policies and procedures to implement the provisions of this chapter which must be consistent with this chapter, except as otherwise provided in this section. The commission shall have tickets available for purchase by the public no later than November 1, 2001, or as soon as practicable. These temporary regulations, polices, and procedures are not considered regulations as defined by the Administrative Procedures Act; however, these temporary regulations, policies, and procedures have the force and effect of law. The temporary regulations must include all policies and procedures deemed by the commission to be necessary to fully implement the games included in Section 59-150-70. The only lottery games that may be played pursuant to these temporary regulations, policies, and procedures are instant tickets and dollar tickets. The commission shall submit regulations to the General Assembly for review in accordance with the Administrative Procedures Act at the January 15, 2002, legislative session. The temporary regulations authorized in this section are repealed on July 15, 2004, or on the effective date of regulations promulgated pursuant to the Administrative Procedures Act, whichever date occurs first. If regulations promulgated pursuant to the Administrative Procedures Act have not taken effect by July 15, 2004, the commission may promulgate the temporary regulations authorized by this section as emergency regulations pursuant to Section 1-23-130. For purposes of this section, the circumstances required for emergency regulations in Section 1-23-130(A) do not apply, but all other provisions of Section 1-23-130 are applicable. The regulations, policies, and procedures must specify, but are not limited to specifying, the:

(1) type of lottery games as described in Section 59-150-20(7). The lottery games may include the selling of lottery game tickets or shares or the use of electronic or mechanical devices, except those electronic or mechanical devices prohibited by Section 59-150-20(7), and except that the game or activity in which the winner is selected must not be based upon the outcome of a football, basketball, baseball, or similar game or sports event;

(2) sale price of lottery game tickets or shares and the manner of sale, except that all sales must be for no more than one dollar and cash only. Payment by checks, credit cards, charge cards, or other form of deferred payment and payment by debit card are prohibited;

(3) number and amount of prizes;

(4) method and location of selecting or validating winning lottery game tickets or shares;

(5) manner and time of payment of prizes, which may include lump sum payments or installments over a period of years, except that the State is not liable for the nonpayment of a prize;

(6) manner of payment of prizes by a lottery retailer to the holders of a winning lottery game ticket or share including, without limitation, provision for payment of prizes not exceeding six hundred dollars after deducting the price of the lottery game ticket or share and after performing validation procedures appropriate to the game and as specified by the board;

(7) frequency of lottery games and drawings or selection of winning lottery game tickets or shares;

(8) means of conducting drawings, except that an elected or appointed official, other than the members of the board or its designee, must not preside or appear at a drawing, and except that the drawing may be aired publicly only by means of a public service announcement and carried by any news outlet that makes public service time available for that purpose;

(9) method to be used in selling lottery game tickets or shares, which may include the use of electronic or mechanical devices, but the devices must be placed on the premises of the lottery retailer in a location which is only accessible to the lottery retailer or his employees;

(10) manner and amount of compensation to a lottery retailer within the limits of this chapter;

(11) other matters necessary or desirable toward ensuring the efficient and effective operation of lottery games as defined in Section 59-150-20(7), the continued entertainment and convenience of the public, and the integrity of the lottery.

Section 59-150-80. (A) The board shall appoint and provide for the compensation of an executive director which must not be based upon or a function of profitability or percentage of sales. The executive director must be an employee of the commission who directs the day-to-day operations and management of the commission and is vested with powers and duties specified by the board and by law. The executive director serves at the pleasure of the board.

(B) The board shall hire and provide for the compensation of an internal auditor and necessary staff who must be employees of the commission and who are vested with the powers and duties specified by the board and by law. The internal auditor shall report directly to the board.

Section 59-150-90. (A) The executive director of the commission shall direct and supervise all administrative and technical activities as provided for in this chapter, according to the terms and conditions as may be established by the General Assembly in its annual general appropriations bill or any bill appropriating monies for previous or current fiscal years and with the regulations promulgated and policies and procedures adopted by the board. It is the duty of the executive director to facilitate the initiation and supervise and administer the operation of the lottery games as defined in Section 59-150-20(7); employ and direct necessary personnel; employ by contract and compensate necessary persons and firms, except that the contract may not be with an entity for the purpose of having that entity undertake the organization and conduct of the lottery; promote or provide for promotion of the lottery and functions related to the commission; prepare a budget for the approval of the board; require bond from a lottery retailer and a lottery vendor in amounts required by the board; report monthly to the State Auditor and the board a full and complete statement of lottery revenues and expenses for the preceding month; and perform other duties generally associated with an executive director of a commission of an entrepreneurial nature.

(B) The executive director for good cause may suspend, revoke, or refuse to renew a contract entered into as provided by the provisions of this chapter or the regulations, policies, and procedures of the board.

(C) The executive director or his designee may conduct hearings and administer oaths to persons for the purpose of assuring the security or integrity of lottery operations or to determine the qualifications of or compliance by a lottery vendor and a lottery retailer.

(D) The executive director shall not contribute to the campaign of a candidate for the General Assembly or a statewide constitutional office; to a political party, as defined in Section 8-13-1300(26); or to a committee, as defined in Section 8-13-1300(6); or make an independent expenditure to advance or defeat a measure related to the lottery.

Section 59-150-100. (A) The commission shall establish and maintain a personnel program for its employees and fix the compensation and terms of compensation of its employees.

(B) An employee of the commission or an immediate family member of an employee of the commission, as defined in Section 59-150-20(6), may not have a financial interest in a lottery vendor doing business or proposing to do business with the commission and is otherwise subject to the South Carolina Ethics Reform Act.

(C) An employee of the commission who has decision-making authority shall not participate in a decision involving a lottery retailer with whom the employee has an economic interest as defined in the South Carolina Ethics Reform Act.

(D) Notwithstanding any other provision of law, an employee of the commission who leaves his employment may not represent a lottery vendor or lottery retailer before the commission for a period of two years following termination of employment with the commission.

(E) A background investigation must be conducted on each applicant who has reached the final selection process before employment by the commission at the level of division director and above and at any level within any division of security and as otherwise required by the board. The commission shall pay for the actual cost of the investigations and may contract with SLED for the performance of the investigations. The results of a background investigation are not a record open to the public pursuant to the Freedom of Information Act.

(F) A person who has been convicted of a felony or bookmaking or other forms of illegal gambling or of a crime involving moral turpitude may not be employed by the commission.

(G) The commission shall bond commission employees who have access to commission funds or lottery revenue in an amount provided by the board and may bond other employees as necessary.

Section 59-150-110. (A) The Governor shall appoint a Lottery Retailer Advisory Board to be composed of ten lottery retailers, representing the broadest possible spectrum of geographical, racial, gender, and business characteristics of a lottery retailer. The Governor also shall appoint the chairman of the advisory board. The function of the advisory board is to advise the lottery board on retail aspects of the lottery and to present the concerns of a lottery retailer throughout the State. The advisory board may establish a consumer representatives committee to help provide additional insight on other aspects of lottery retail sales.

(B) Members appointed to the advisory board serve terms of two years, except that four of the initial lottery retailer appointees serve initial terms of one year and five serve initial terms of two years. The chairman of the advisory board serves co-terminus with the Governor.

(C) The advisory board shall establish its own rules and internal operating procedures. Members of the advisory board serve without compensation or the per diem, subsistence, or mileage provided by law for members of state boards, committees, and commissions. The advisory board may report to the board of commissioners in writing at any time. The board of commissioners may invite the advisory board to make an oral presentation to the commissioners at regular meetings of the board.

Section 59-150-120. The commission shall provide training programs and other educational activities to enable small and minority businesses to compete for contracts on an equal basis. The board shall monitor the results of small and minority business participation and shall report the results of small and minority business participation to the State Human Affairs Commission on at least an annual basis pursuant to Section 1-13-110.

Section 59-150-130. (A) In coordination with SLED, the commission shall investigate the financial responsibility, security, and integrity of a lottery vendor who is a finalist in submitting a bid, proposal, or offer as part of a procurement. To defray a portion of the expense of this investigation, each lottery vendor finalist shall submit a certified check for five thousand dollars to the commission. This sum must be placed in an escrow account from which SLED must be paid to conduct the investigation pursuant to this section. If five thousand dollars is not sufficient to complete the investigation, the commission shall require the lottery vendor finalist to remit additional funds. Any funds remaining in the escrow account after the investigation is complete must be returned to the lottery vendor finalist. At the time of submitting the bid, proposal, or offer to the commission, the commission shall require disclosure of the:

(1) lottery vendor's name and address and, as applicable, the names and addresses of the following, if the lottery vendor is:

(a) a corporation, the officers and directors and each stockholder in the corporation, except that in the case of owners of equity securities of a publicly-traded corporation, the names and addresses of only those known to the corporation to own beneficially five percent or more of the securities must be disclosed;

(b) a trust, the trustee and all persons entitled to receive income or benefits from the trust;

(c) an association, the members, officers, and directors; and

(d) a partnership or joint venture, all of the general partners, limited partners, or joint venturers;

(2) states and jurisdictions in which the lottery vendor does business and the nature of the business for each such state or jurisdiction;

(3) states and jurisdictions in which the lottery vendor has contracts to supply gaming goods or services including, but not limited to, lottery goods and services, and the nature of the goods or services involved for each state or jurisdiction;

(4) states and jurisdictions in which the lottery vendor has applied for, sought renewal of, received, been denied, or had revoked, or has issuance pending of, a lottery or gaming license of any kind or had fines or penalties assessed to his license, contract, or operation and the disposition of each in each state or jurisdiction. If a lottery or gaming license or contract has been revoked or has not been renewed or a lottery or gaming license or application has been denied or is pending and has remained pending for more than six months, all of the facts and circumstances underlying the failure to receive a license must be disclosed;

(5) details of a finding or any plea, conviction, or adjudication of guilt in a state or federal court of the lottery vendor for a felony or other criminal offense other than a traffic violation. A fingerprint exemplar may be required to satisfy this item;

(6) details of any bankruptcy, insolvency, reorganization, or corporate or individual purchase or takeover of another corporation, including bonded indebtedness, or pending litigation of the lottery vendor;

(7) contributions made to the campaign of a candidate for the General Assembly or statewide constitutional office, to any political party, as defined in Section 8-13-1300(26), or to a committee, as defined in Section 8-13-1300(6), or independent expenditures made to advance or defeat a measure related to the lottery for the twelve-month period before the application and up to the date of disqualification of the applicant or the awarding of the contract, whichever occurs first; and

(8) additional information the commission determines appropriate for the procurement involved. If at least twenty percent of the cost of a lottery vendor's contract is subcontracted, the lottery vendor shall disclose all of the information required by this section for the subcontractor as if the subcontractor were itself a lottery vendor.

(B) A lottery procurement contract must not be entered into with a lottery vendor who has not complied with the disclosure requirements described in subsection (A), and a contract with a noncomplying lottery vendor is voidable at the option of the commission. The commission may terminate a contract with a lottery vendor who does not comply with the requirements for periodically updating the disclosures during the time specified in the contract. The provisions of this section must be construed broadly and liberally to achieve the ends of full disclosure of all information necessary to allow for a full and complete evaluation by the commission of the competence, integrity, background, and character of a lottery vendor for procurements.

(C) A procurement contract must not be entered into with a lottery vendor if he or it has:

(1) been convicted of a criminal offense related to the security or integrity of the lottery in this or another jurisdiction;

(2) been convicted of unlawful gambling activity, false statements, false swearing, or perjury in this or another jurisdiction or convicted of a crime punishable by more than one year of imprisonment or a fine of more than one thousand dollars, or both, unless the person's civil rights have been restored and at least five years have elapsed from the date of the completion of the sentence without a subsequent conviction of a crime described in this subitem; or

(3) been found to have violated the provisions of this chapter or a regulation, policy, or procedure of the commission, unless either ten years have passed since the violation or the board finds the violation both minor and unintentional in nature.

(D) A procurement contract must not be entered into with a lottery vendor if the lottery vendor has an ownership interest in an entity that supplied consultation services under contract to the commission regarding the request for proposals pertaining to those particular goods or services.

(E) A lottery vendor or applicant for a major procurement contract may not pay, give, or otherwise make available an economic opportunity, gift, loan, gratuity, special discount, favor, hospitality, or service, excluding food and beverages having an aggregate value not exceeding twenty-five dollars in one day or two hundred dollars in a calendar year, or any other thing of value, to the executive director, a board member, or an employee of the commission or to a member of his immediate family residing in the same household. For purposes of this subsection all terms are used as defined in Section 8-13-100.

(F) A lottery vendor who has entered into the competitive solicitation process for a procurement contract or has been awarded a procurement contract with the commission shall not contribute, for a period of twelve months before entering into the procurement process, except that during the first twelve months the period must be from the date of enactment, and during the term of the contract, to the campaign of a candidate for the General Assembly or a statewide constitutional office; to a political party, as defined in Section 8-13-1300(26); or to a committee, as defined in Section 8-13-1300(6); or make an independent expenditure to advance or defeat a measure related to the lottery.

(G) A former public official holding public office, a former public member holding public membership, or a former public employee having public employment on or after the effective date of this chapter may not serve a lottery vendor for a period of two years after terminating his public service or employment.

(H) A lottery vendor may not enter into a contract for the purpose of influencing a political decision in connection with the operation of the lottery, and a lottery vendor may not employ, contract with, or otherwise authorize a lobbyist, as defined in Section 2-17-10(13), to engage in lobbying, as defined in Section 2-17-10(12), on behalf of the lottery vendor.

(I) A lottery vendor may not advertise or promote the lottery or its business relationship with the commission.

(J) A lottery vendor that is a contractor with the State or any agency, commission, or department of the State shall disclose, upon written inquiry, the amount of any commission, referral fee, finder's fee, consulting fee, contingency fee, or other monies paid in connection with obtaining the contract and the name of the person to whom the monies were paid.

(K) The prohibitions and restrictions described in item (A)(7) and subsections (F) and (H) specifically apply to a lottery vendor as defined in Section 59-150-20(9) and its employees, members of its board, and holders of an interest in it of more than ten percent, and their immediate family members, as defined in Section 59-150-20(6).

(L) The commission is prohibited from contracting with a lottery vendor if the fee or commission payable in connection with the service or product is contingent, in whole or in part, upon performance of lottery sales or other lottery profitability measure.

Section 59-150-140. (A) At the execution of the contract with the commission, a lottery vendor shall post a performance bond or letter of credit from a bank or credit provider acceptable to the commission in an amount determined by the commission for that particular bid or contract. Instead of the bond, a lottery vendor, to assure the faithful performance of its obligations, may deposit and maintain with the commission securities that are interest bearing or accruing and that are rated in one of the three highest classifications by an established nationally recognized investment rating service. Securities eligible pursuant to this section are limited to:

(1) certificates of deposit issued by solvent banks or savings associations which are organized and existing under the laws of this State or under the laws of the United States and are approved by the commission;

(2) United States bonds, notes, and bills for which the full faith and credit of the government of the United States is pledged for the payment of principal and interest; and

(3) corporate bonds approved by the commission. The corporation that issued the bonds must not be an affiliate or subsidiary of the depositor. The securities must be held in trust and must have at all times a market value equal at least to the full amount estimated to be paid annually to the lottery vendor under contract.

(B) Each lottery vendor must be qualified to do business in this State and shall file appropriate tax returns as provided by the laws of this State. All contracts pursuant to this section are governed by the laws of this State.

(C) A contract may not be let with a lottery vendor in which a public official has an ownership interest unless the letting of the contract complies with Section 8-13-775.

(D) Procurement contracts must be handled in accordance with the South Carolina Consolidated Procurement Code.

(E) In all contracts entered into in connection with this chapter, the resident lottery vendor preference provided in Section 11-35-1524 must apply to procurements made by the commission, except that the following additional provisions apply:

(1) the preference also must apply to the procurement of services, as defined in Section 11-35-310(29), and advertising;

(2) with respect to the procurement of services or advertising, the definition of the term 'resident lottery vendor' must be modified as provided in this item. Section 11-35-1524(B)(6)(c) does not apply to a lottery vendor providing services or advertising. Instead of Section 11-35-1524(B)(6)(c), the lottery vendor shall provide services or advertising which are representative of the general type of services or advertising on which the bid is submitted;

(3) with respect to the procurement of services or advertising, instead of providing the certifications provided in Section 11-35-1524(C), the lottery vendor shall certify in writing in the bid:

(a) that he is resident of the State;

(b) the services or advertising is available; and

(c) the cost of the services or advertising is not unreasonable.

Section 59-150-150. (A) The commission shall develop and maintain a statewide network of lottery retailers to serve the public convenience and promote the sale of tickets or shares and the playing of lottery games as defined in Section 59-150-20(7) while ensuring the integrity of the lottery operations, games, and activities. A lottery retailer's sales of lottery tickets or shares may not exceed sixty percent annually of its total business as measured by gross revenues. The Department of Revenue shall provide data concerning a lottery retailer's gross revenues to assist the commission in verifying compliance with this provision. The commission also shall provide a small retailer a chance to participate in the sales of lottery tickets or shares; provide for compensation to a lottery retailer in the form of commissions in an amount of not more than seven percent of gross sales and not more than a one percent incentive for cashing winning tickets for prizes less than six hundred dollars; and issue a license to each person with whom it contracts as a lottery retailer for purposes of display. Each lottery retailer shall post and display conspicuously its license on the disclosure sign required by Section 59-150-60(A)(17). A license is not assignable or transferable.

(B) The board shall develop a list of objective criteria upon which the qualification of a lottery retailer must be based. Separate criteria must be developed to govern the selection of a lottery retailer of instant tickets and an on-line lottery retailer. In developing these criteria, the board shall consider factors such as the applicant's financial responsibility, integrity, and reputation, and the security of the applicant's place of business or activity, and accessibility to the public. The board shall not consider political affiliation or activities or monetary contributions to political organizations or candidates for public office. The criteria must include, but is not limited to, the following:

(1) The applicant must be current in filing all applicable tax returns to the State of South Carolina and in payment of all taxes, interest, and penalties owed to the State of South Carolina, excluding items under formal appeal pursuant to applicable statutes. The Department of Revenue shall provide this information to the commission.

(2) A person, partnership, unincorporated association, corporation, or other business entity must not be selected as a lottery retailer if he or it:

(a) has been convicted of a criminal offense related to the security or integrity of the lottery in this or another jurisdiction;

(b) has been convicted of unlawful gambling activity, false statements, false swearing, or perjury in this or another jurisdiction or convicted of a crime punishable by more than one year of imprisonment or a fine of more than one thousand dollars, or both, unless the person's civil rights have been restored and at least five years have elapsed from the date of the completion of the sentence without a subsequent conviction of a crime described in this subitem;

(c) has been found to have violated the provisions of this chapter or a regulation, policy, or procedure of the commission, unless either ten years have passed since the violation or the board finds the violation both minor and unintentional in nature;

(d) is a lottery vendor or an employee or agent of a lottery vendor doing business with the commission;

(e) resides in the same household as an officer of the commission;

(f) has made a statement of material fact to the commission knowing the statement is false;

(g) has a business of selling lottery tickets or shares that accounts for more than sixty percent annually of its gross revenues, except that the commission may not sell or give away lottery tickets or shares as a lottery retailer, as provided in Section 59-150-210;

(h) has not attained the age of twenty-one years, except that this age restriction applies only to the lottery retailer or lottery retailer applicant and not to a bona fide employee of the lottery retailer; and

(i) has its place of business located within three hundred feet of a church, school, or playground situated within a municipality or within five hundred feet of a church, school, or playground situated outside of a municipality. These distances must be measured in a straight line, without regard to intervening structures or objects, from the nearest property line of the lot on which a building or structure is used as a lottery retailer to the nearest property line of the location of the church, school, or playground, which are defined as follows:

( i) 'church' means an establishment, other than a private dwelling, where religious services are usually conducted;

( ii) 'school' means an establishment, other than a private dwelling, where the usual processes of education are usually conducted; and

(iii) 'playground' means a place, other than grounds at a private dwelling, which is provided by the public or members of a community for recreation.

The restrictions in subitem (i) do not apply to the renewal of a license or to a new application for a location that is licensed at the time the new application is filed with the commission.

(3) A person applying to become a lottery retailer must be charged a uniform application fee for each lottery outlet. A lottery retailer who participates in on-line lottery games must be charged a uniform application fee for each on-line outlet.

(4) A lottery retailer contract executed pursuant to this chapter may be suspended, revoked, or terminated for good cause by the executive director or his designee if the lottery retailer is found to have violated a provision of this chapter or the regulations, policies, and procedures established by the board. Review of activities is subject to the Administrative Procedures Act.

(5) Lottery retailer contracts may be renewable annually at the discretion of the commission, unless sooner canceled or terminated.

(6) A lottery retailer or lottery retailer applicant shall not pay, give, or otherwise make available anything of value to a member of the board of directors of the commission in violation of provisions of the South Carolina Ethics Reform Act.

(7) A lottery retailer who enters into a contract with the commission shall file an initial certified report with the State Ethics Commission showing all contributions or donations made to a committee, as defined in Section 8-13-1300(6). The lottery retailer shall file additional certified reports within ten days following the end of each calendar quarter and for the duration of the contract with the commission.

Section 59-150-160. (A) A lottery retailer contract is not transferable or assignable. A lottery retailer shall not contract with a person for lottery goods or services except with the approval of the board.

(B) Lottery game tickets and shares must be sold only by the lottery retailer named on the lottery retailer certificate.

(C) A lottery retailer may not advertise or promote the lottery outside of the lottery retailer's business premises, and is restricted to the advertising and promotion as permitted in Section 59-150-60(A)(17).

Section 59-150-170. (A) The commission shall establish a fidelity fund separate from all other funds and shall assess each lottery retailer a one-time fee not to exceed one hundred dollars for each sales location. Monies deposited into the fund may be used to cover losses the commission may experience due to nonfeasance, misfeasance, or malfeasance of a lottery retailer. The monies may be invested by the commission pursuant to state investment practices. All earnings attributable to the investments accrue to the fund. In addition, the funds may be used to purchase blanket bonds covering the commission against losses from all a lottery retailer. At the end of each fiscal year, the commission shall pay to the Education Lottery Account any amount in the fidelity fund which exceeds five hundred thousand dollars, and the funds paid must be treated as net proceeds from the lottery.

(B) A reserve account may be established as a general operating expense to cover amounts considered uncollectible from the a lottery retailer. The commission shall establish procedures for minimizing losses that may be experienced by reason of nonfeasance, misfeasance, or malfeasance of a lottery retailer, and shall exercise and exhaust all available options in the procedures before amounts are written off to this account.

(C) The commission may require a lottery retailer to post an appropriate bond, as determined by the commission, using an insurance company acceptable to the commission. The amount must not exceed the applicable district sales average of lottery game tickets for two billing periods.

(D)(1) In its discretion, the commission may allow a lottery retailer to deposit and maintain with the commission securities that are interest bearing or accruing. Securities eligible pursuant to this item are limited to:

(a) certificates of deposit issued by solvent banks or savings associations organized and existing under the laws of this State or under the laws of the United States;

(b) United States bonds, notes, and bills for which the full faith and credit of the United States is pledged for the payment of principal and interest; and

(c) federal agency securities by an agency or instrumentality of the United States government.

(2) The securities must be held in trust in the name of the commission.

Section 59-150-180. (A) A retail contract executed by the commission pursuant to this chapter must specify the reasons for which the contract may be canceled, suspended, revoked, or terminated by the commission including, but not be limited to:

(1) a violation of this chapter, a regulation, or a policy or procedure of the commission;

(2) failure to account accurately or timely for lottery game tickets, lottery games, revenues, or prizes as required by the commission;

(3) fraud, deceit, or misrepresentation;

(4) insufficient sales;

(5) conduct prejudicial to public confidence in the lottery;

(6) filing for or placement in bankruptcy or receivership of the lottery retailer;

(7) a material change, as determined in the sole discretion of the commission, in a matter considered material by the commission in executing the contract with the lottery retailer; or

(8) failure to meet any of the objective criteria established by the commission pursuant to this chapter.

(B) If cancellation, denial, revocation, suspension, or rejection of renewal of a lottery retailer contract is in the best interest of the lottery, the public welfare, or the State of South Carolina, the executive director or his designee, in his discretion, may cancel, suspend, revoke, or terminate, after notice and a right to a hearing, a contract issued pursuant to this chapter. A hearing must be held within sixty days of notice of cancellation, suspension, revocation, or termination and conducted by the executive director or his designee. A party to the contract aggrieved by the decision of the executive director or his designee may appeal the adverse decision to the board, and then to the Administrative Law Judge Division, pursuant to the Administrative Procedures Act.

Section 59-150-190. (A) All proceeds from the sale of the lottery game tickets or shares constitute a trust fund until paid to the commission either directly or through the commission's authorized collection representative. A lottery retailer and officers of a lottery retailer's business have a fiduciary duty to preserve and account for lottery proceeds, and a lottery retailer personally is liable for all proceeds. Proceeds include unsold instant tickets received by a lottery retailer and cash proceeds of the sale of lottery products, net of allowable sales commissions and credit for lottery prizes sold or paid to winners by a lottery retailer. Sales proceeds and unused instant tickets must be delivered to the commission or its authorized collection representative upon demand.

(B) The commission shall require a lottery retailer to place all lottery proceeds due the commission in accounts in institutions insured by the Federal Deposit Insurance Corporation (FDIC) no later than the close of the next banking day after the date of their collection by the lottery retailer until the date they are paid over to the commission. At the time of the deposit, lottery proceeds are considered the property of the commission, and a lottery retailer personally is liable for those proceeds due the commission. The commission may require a lottery retailer to establish a single separate electronic funds transfer account where available for the purpose of receiving monies from ticket or share sales, making payments to the commission, and receiving payments for the commission. Unless otherwise authorized in writing by the commission, each lottery retailer shall establish a separate bank account for lottery proceeds which must be kept separate and apart from all other funds and assets, and must not be commingled with any other funds or assets. A lottery retailer, upon the deposit of lottery proceeds in excess of insurance coverage by the FDIC, shall furnish an indemnity bond from a responsible surety company authorized to do business in this State in an amount sufficient to protect the State against loss in the event of insolvency or liquidation of the institution or for another cause. A lottery retailer, instead of the indemnity bond, may pledge as collateral for the deposits, obligations of the United States, obligations fully guaranteed both as to principal and interest by the United States, obligations of the Federal National Mortgage Association, the Federal Home Loan Bank, Federal Farm Credit Bank, the Federal Home Loan Mortgage Corporation, or general obligations of this State or a political subdivision of it. The State Treasurer shall exercise prudence in accepting the securities listed as collateral. The surety or collateral must be filed with the State Treasurer at time of deposit.

(C) Proceeds from the sale of lottery game tickets or shares received by a lottery retailer who becomes insolvent or dies insolvent, are due the commission from the person or his estate in preference over all debts or demands.

(D) A lottery retailer is not required to pay for lottery tickets or shares until the tickets or shares have been activated by the commission.

Section 59-150-200. If a lottery retailer's rental payments for the business premises are contractually computed, in whole or in part, on the basis of a percentage of retail sales and the computation of retail sales is not defined explicitly to include sales of lottery game tickets or shares in a state operated or state managed lottery, only the compensation received by the lottery retailer from the commission may be considered the amount of the lottery retail sale for purposes of computing the rental payment.

Section 59-150-210. (A) A person shall not sell a lottery game ticket or share at a price other than that established by the commission. A person, other than a duly certified lottery retailer, shall not sell lottery game tickets, but a person may purchase lawfully lottery game tickets or shares and make a gift of the lottery game tickets or shares to another. The commission may designate certain agents and employees to sell lottery game tickets or shares directly to the public.

(B) A lottery retailer shall not sell a lottery game ticket or share except from the locations listed in the lottery retailer's contract and as evidenced by the lottery retailer's certificate of authorization unless the commission authorizes, in writing, a temporary location not listed in the lottery retailer's contract.

(C) Lottery game tickets or shares must not be sold to persons under eighteen years of age, but a person eighteen years of age or older may purchase lawfully lottery game tickets or shares and make a gift to a person of any age. If a minor lawfully receives a winning lottery game ticket, the commission may direct payment of proceeds of a lottery prize in an amount not exceeding two thousand five hundred dollars to the parent or guardian of the minor without court approval and without appointment of a conservator. In the case of a lottery prize greater than two thousand five hundred dollars and not exceeding twenty-five thousand dollars, payment must be made in accordance with the procedures outlined in Section 62-5-103 as they relate to distribution. In the case of a prize in an amount greater than twenty-five thousand dollars, payment must be made to a duly appointed conservator to be held for the benefit of the minor, pursuant to Section 62-5-433.

(D) A lottery ticket or share may not be sold on the date of any general elections or on any Sunday; within three hundred feet of a church, school, or playground, as provided in Section 59-150-150(B)(2)(i); to a lottery game other than that defined in Section 59-150-20(7); or to a lottery game with corporate sponsorship. A lottery ticket or share may not be sold at a location that serves alcohol for on-premise consumption.

(E) a lottery ticket or share may not be sold on the campus of a public institution of higher learning as defined in Section 59-103-5.

Section 59-150-220. (A)(1) Upon the theft of instant tickets, a lottery retailer shall report immediately the theft to both the local law enforcement authority and to the commission's division of security.

(2) If tickets are stolen before the book is activated, and no tickets within the book have been sold:

(a) the lottery retailer must be charged a nonrefundable service fee for each incident in an amount determined by the commission to cover its costs only, so long as the name of the local law enforcement agency contacted and the assigned case number are furnished promptly to the commission;

(b) if the name of the local law enforcement agency and the assigned case number are not provided to the commission within thirty calendar days after the discovery by the lottery retailer of the theft, the commission shall charge the lottery retailer in accordance with subsection (3)(b).

(3) If tickets are stolen after the book has been activated or tickets within the book have been sold:

(a) a lottery retailer must be charged the net sales value (retail sales value less commission) for each book, less the low tier prize values of stolen tickets not paid at the time of the incident, so long as the lottery retailer furnished the name of the local law enforcement agency and the assigned case number to the commission;

(b) if the name of a law enforcement agency and case number are not provided to the commission within thirty calendar days after the discovery by the lottery retailer of the theft, credit for the unpaid low tier prizes must not be given and the lottery retailer must be charged the net sales value (retail sales value less commission) for each book.

(4) The commission shall adjust charges described in item (3) for the following reasons:

(a) the commission shall charge a lottery retailer the low tier prize value of tickets that are presented to the commission as claims subsequent to the date of the incident. The commission shall determine which prizes must be subsequently paid based upon the facts of the incident, and that amount must be charged to the lottery retailer;

(i) the net sales value of the tickets recovered must be compared to the total value of the uncashed low tier prizes for each book of tickets. The lottery retailer shall receive credit for the greater of these two values;

(ii) recovered tickets must be returned to the commission by the declared end of game redemption deadline or one hundred eighty days from the date of the incident, whichever is later. The game, book, and ticket number must be legible on each ticket for the lottery retailer to receive credit. If tickets are being held as evidence in a criminal investigation by a law enforcement agency, the commission shall accept a property report from that agency by the declared end of the game redemption deadline or one hundred eighty days from the date of the incident, whichever is later, detailing the game, book, and ticket number or Void If Removed Number (VIRN) for the tickets being held, as documentation to provide credit;

(iii) recovered scratched tickets may be accepted for credit only if that condition of the tickets is identified in documentation provided to the commission by the local law enforcement agency;

(iv) the lottery retailer shall receive no credit for recovered tickets that have been validated;

(v) the commission shall determine the credits provided based upon the facts of the incident, and that amount must be credited to the lottery retailer.

(5) Books reported to the commission as stolen must be marked in the commission's records to prevent validation and payment of prizes within the book.

(B)(1) Upon the loss or damage of instant tickets, a lottery retailer immediately shall report the loss or damage to the both the local law enforcement authority and to the commission's division of security.

(2) If tickets are damaged before the book is activated, no tickets within the book are sold, and all tickets in the book are returned to the commission, a lottery retailer may not be charged a service fee. If tickets are lost before the book is activated and no tickets within the book have been sold, a lottery retailer must be charged a nonrefundable service fee of twenty-five dollars for each incident for up to four books and five dollars for each book over four books.

(3) If tickets are lost or damaged after the book is activated or if tickets within the book are sold, a lottery retailer must be charged the net sales value (retail sales value less commission) for each book.

(4) Upon the written approval by the commission, the commission shall provide credit for recovered lost or damaged tickets for the net sales value of the tickets recovered.

(a) To receive approval, the lottery retailer shall provide the facts of the incident in writing to the commission for consideration.

(b) The written request and recovered tickets must be returned to the commission by the redemption deadline and the game, book, and ticket number must be legible on each ticket in order for the lottery retailer to receive credit.

(c) Scratched tickets must not be accepted for credit. A scratched ticket is one that in the commission's judgment has been compromised as to the security and integrity of the ticket due to removal of latex.

(d) Tickets identified as validated before the recovery result in no credit to the lottery retailer.

(5) Books reported to the commission as lost or damaged must be marked as such in the commission's records to prevent validation and payment of prizes within the book.

(6) In the event of acts of God, occurrences of nature, or other natural disasters, the commission may waive the requirements of this subsection.

Section 59-150-230. (A) Lottery prizes are subject to the South Carolina state income tax. Residents and nonresidents of this State who receive a lottery prize in excess of five hundred dollars are subject to a mandatory withholding of state income tax as required by law. Federal income tax must be withheld from lottery prizes in excess of five thousand dollars. Neither the State nor a county, municipality, or other political subdivision of this State may impose a tax, other than the state sales tax imposed pursuant to Chapter 36 of Title 12 and local sales taxes authorized by state law, on the sale of a lottery ticket or share or on the payment of a prize pursuant to this chapter; nor may a county, municipality, or other political or public subdivision assess an ad valorem tax against a lottery ticket or share bought or sold pursuant to this chapter.

(B) Except as otherwise provided in this chapter, attachments, garnishments, or executions authorized and issued pursuant to law must be withheld if timely served upon the commission. This subsection does not apply to a lottery retailer.

(C) The commission shall promulgate regulations and adopt policies and procedures to establish a system of verifying the validity of lottery games tickets or shares claimed to win prizes and to effect payment of prizes.

(1) A prize, a portion of a prize, or a right of a person to a prize awarded is not assignable except as provided in this section. A prize or a portion of a prize remaining unpaid at the death of a prize winner must be paid to the estate of the deceased prize winner or to the trustee of a trust established by the deceased prize winner as settlor if a copy of the trust document or instrument has been filed with the commission with a notarized letter of direction from the settlor and no written notice of revocation has been received by the commission before the settlor's death. Following a settlor's death and before payment to a trustee, the commission shall obtain from the trustee a written agreement to indemnify and hold the commission harmless with respect to claims that may be asserted against the commission arising from payment to or through the trust. Notwithstanding any other provisions of this section, a person, pursuant to an appropriate judicial order, may be paid the prize to which a winner is entitled.

(2) (a) If the winner of a lottery game prize elects to receive his prize by way of deferred payments, the commission must deposit, in the same quarter as the prize was won and in a restricted account, the total amount of the prize. The deferred payments to the winner of the lottery game prize must be paid out only from that restricted account.

(b) The restricted account provided in subitem (a) must be known as the 'Deferred Lottery Prize Payment Account'. The monies in the restricted account may be used only for the purpose of making deferred payments of a lottery game prize as elected by a prize winner. The monies in the Deferred Lottery Prize Payment Account may not be used to determine the assets of the commission, except to manifest them as encumbered.

(c) The State Treasurer may invest the monies deposited in the Deferred Lottery Prize Payment Account as provided by law.

(3) A prize must not be paid if it:

(a) arises from claimed lottery game tickets that are stolen, counterfeit, altered, fraudulent, unissued, produced or issued in error, unreadable, not received, or not recorded by the commission within applicable deadlines;

(b) lacks captions that conform and agree with the play symbols as appropriate to the particular lottery game involved; or

(c) fails to comply with additional specific regulations and public or confidential validation and security tests of the commission appropriate to the particular lottery game involved.

(4) A particular prize in a lottery game must not be paid more than once, and if more than one person is entitled to a particular prize, the sole remedy of those persons is the award to each of them of an equal share in the prize.

(5) A holder of a winning lottery game ticket or share from a lottery game must claim a cash prize within one hundred eighty days after the drawing in which the cash prize was won. In a South Carolina lottery game in which the player may determine instantly if he has won or lost, he must claim a cash prize within ninety days after the end of the lottery game. If a valid claim is not made for a cash prize within the applicable period, the cash prize is an unclaimed prize for purposes of this chapter.

(D) A prize must not be paid upon a lottery game ticket or share purchased or sold in violation of this chapter and is an unclaimed prize for purposes of this section.

(E) The commission is discharged of all liability upon payment of a prize.

(F) A lottery game ticket or share must not be purchased by and a prize must not be paid to a member of the board, an officer or employee of the commission, or a spouse, child, brother, sister, or parent residing as a member of the same household in his principal place of residence. A lottery game ticket or share must not be purchased by and a prize must not be paid to an officer, employee, agent, or a subcontractor of a lottery vendor, or a spouse, child, brother, sister, or parent residing as a member of the same household in his principal place of residence if he has access to confidential information that may compromise the integrity of the lottery.

(G) A lottery prize may not be paid to a person who is incarcerated or on probation or parole. A lottery prize payment received in violation of this subsection must be returned immediately and in full to the commission.

(H) The use of an electronic or mechanical machine designed for a lottery game authorized pursuant to this chapter must be limited to a lottery retailer and their employees only in order to facilitate retail sales of lottery tickets, and such a machine must not dispense as a prize coins or currency. The operation of the lottery games excludes machines and lottery games, including video poker lottery games, prohibited by Sections 12-21-2710, 16-19-40 and 16-19-50.

(I) Unclaimed prize money must be deposited in the Education Lottery Account each year. A portion of the unclaimed prize money, in an amount to be determined by the General Assembly in its annual general appropriations bill and other bills appropriating monies for previous or current fiscal years, must be allocated to the Department of Education for the purchase of new school buses. A portion, in an amount to be determined by the General Assembly, of the unclaimed prize money in the Education Lottery Account, must be allocated by the General Assembly in its annual general appropriations bill or any bill appropriating monies for previous or current fiscal years to the South Carolina Department of Alcohol and Other Drug Abuse Services for the treatment of compulsive gambling disorder and educational programs related to that disorder, including a gambling hotline. The director of the DAODAS shall report to the board on the programs implemented with these funds, and provide a copy of the report to the General Assembly.

Section 59-150-240. (A) The commission is subject to the provisions of Chapter 4, Title 30, the South Carolina Freedom of Information Act.

(B) The commission shall perform full criminal background investigations before the execution of a lottery vendor contract.

(C) The commission or its authorized agent shall:

(1) conduct criminal background investigations and credit investigations on all potential a lottery retailer and employees;

(3) inspect, at times determined solely by the commission, the facilities or operations of a lottery vendor or lottery retailer to determine the integrity of the lottery vendor's product or compliance by the lottery retailer or lottery vendor with its contract;

(4) report suspected violations of this chapter to the appropriate investigative and prosecutorial agency having jurisdiction over the violation; and

(5) upon request, provide assistance to a solicitor, the Attorney General, or a law enforcement agency investigating a violation of this chapter.

Section 59-150-250. (A) A person who knowingly sells a lottery game ticket or share to a person under eighteen years of age or permits a person under eighteen years of age to play a lottery game is guilty of a misdemeanor and, upon conviction, must be fined not less than one hundred dollars nor more than five hundred dollars or be imprisoned not less than thirty days nor more than sixty days, or both, in the discretion of the court. It is an affirmative defense to a charge of a violation of this section that the lottery retailer reasonably and in good faith relied upon representation of proof of age in making the sale.

(B) A person under eighteen years of age who knowingly purchases a lottery game ticket is guilty of a misdemeanor and, upon conviction, must perform twenty hours of community service or must be fined not less than one hundred dollars and not more than five hundred dollars.

(C) A lottery ticket or share must bear a conspicuous label prohibiting the play of the game by a person under eighteen years of age.

(D) A lottery game using an electronic or mechanical device must bear a conspicuous label prohibiting the use of the device by a person under eighteen years of age. Electronic or mechanical device does not include machines and other gaming devices including video poker and games prohibited by Sections 12-21-2710, 16-19-40, and 16-19-50.

(E) A person who is incarcerated or on probation or parole who knowingly accepts a lottery prize is guilty of a misdemeanor and, upon conviction, must be fined not less than ten dollars nor more than one hundred dollars or imprisoned for not less than two days nor more than thirty days, or both.

(F) A person who is convicted of a violation of subsection (A) subjects his employer, for a first violation, to a fine not less than one hundred dollars nor more than two hundred fifty dollars; for a second violation, to a fine not less than two hundred fifty-one dollars nor more than five hundred dollars; and for a third and subsequent violation, to a fine not less than five hundred and one dollars and immediate license revocation by the commission.

Section 59-150-260. (A) A person who, with intent to defraud, falsely makes, alters, forges, utters, passes, or counterfeits a state lottery game ticket is guilty of a felony and, upon conviction, must be fined not more than fifty thousand dollars or imprisoned not more than five years, or both.

(B) A person who influences or attempts to influence the winning of a prize through the use of coercion, fraud, deception, or tampering with lottery equipment or materials is guilty of a felony and, upon conviction, must be fined not more than fifty thousand dollars or imprisoned not more than five years, or both.

(C) A person who is convicted of a violation of subsection (A) or (B) must not be the recipient of an award of a lottery prize or a portion of a lottery prize, and is ineligible for employment by the commission.

Section 59-150-270. (A) A person must not knowingly or intentionally make a material false statement in an application for a license or proposal to conduct lottery activities or a material false entry in a book or record which is compiled or maintained or submitted to the board or its designee pursuant to the provisions of this chapter. A person who violates the provisions of this section is guilty of a felony and, upon conviction, must be fined not more than twenty-five thousand dollars or the dollar amount of the false entry or statement, whichever is greater, or imprisoned for not more than five years, or both.

(B) A person who is convicted of a violation of subsection (A) also must surrender his license immediately and is ineligible to be issued a license by the commission.

Section 59-150-275. A person who specifically is made subject to the South Carolina Ethics Reform Act by this chapter and who knowingly violates a provision of this chapter that prohibits contributions to political campaigns or parties, independent expenditures to advance or defeat a lottery-related issue, employment of a lobbyist, representation of a client before the board as a former employee, or other prohibitions or restrictions relating to the unfair receipt of a pecuniary benefit from his association with the lottery, is guilty of a felony and, upon conviction, must be fined not more than twenty-five thousand dollars or imprisoned for not more than five years, or both.

Section 59-150-280. (A) The commission may enter into intelligence sharing, reciprocal use, or restricted use agreements with the federal government, law enforcement agencies, lottery regulation agencies, and gaming enforcement agencies of other jurisdictions which provide for and regulate the use of information provided and received pursuant to the agreement.

(B) Records, documents, and information in the possession of the commission received pursuant to an intelligence sharing, reciprocal use, or restricted use agreement entered into by the commission with a federal department or agency, a law enforcement agency, or the lottery regulation or gaming enforcement agency of a jurisdiction are considered investigative records of a law enforcement agency and are subject to the confidentiality and disclosure policies, and must not be released without the permission of the person or agency providing the record or information, except as may be required by the Freedom of Information Act.

Section 59-150-290. The commission shall enter into its contracts for procurements in compliance with the South Carolina Consolidated Procurement Code.

Section 59-150-300. (A) Any lottery retailer, lottery vendor, applicant for a lottery retailer license, or lottery game ticket holderaggrieved by an action of the board may appeal that decision to the Administrative Law Judge Division. The action is subject to review by an administrative law judge on the record of the board, upon petition of the aggrieved person within ten days from receipt of official notice from the board of the action of which review is sought. Service of notice is presumed conclusively ten days after mailing by registered or certified mail to the applicant or licensee of notice at his last known address. An appeal to the Administrative Law Judge Division pursuant to this section is not a contested case as defined by the Administrative Procedures Act; however, the appeal is subject to the procedural due process requirements provided for in Article 5, Chapter 23, Title 1 and the Rules of Procedure of the Administrative Law Judge Division. Appeals regarding lottery vendor contracts must be brought pursuant to the South Carolina Procurement Code.

(B) The Administrative Law Judge Division shall hear appeals from decisions of the board and, based upon the record of the proceedings before the board, may reverse the decision of the board only if the appellant proves the decision to be:

(1) in violation of constitutional or statutory provisions;

(2) in excess of the statutory authority of the board;

(3) made upon unlawful procedure;

(4) affected by other error of law;

(5) clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record; or

(6) arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.

(C) The Administrative Law Judge Division may remand an appeal to the board to conduct further hearings.

(D) For judicial review of a final decision of an administrative law judge in a case involving the commission, the petition by an aggrieved party must be filed with the circuit court and served on the opposing party not more than thirty days after the aggrieved party receives the final decision and order of the administrative law judge. Appeal in these matters is by right.

(E) A lottery vendor who appeals the award of a procurement contract for the supply of a lottery game ticket system, share system, or an on-line or other mechanical or electronic system is liable for all costs of appeal and defense if the appeal is denied or the contract award is upheld. Cost of appeal and defense specifically includes, but is not limited to, administrative proceedings, court costs, bond, legal fees, and loss of income to the commission resulting from institution of the appeal if, upon the motion of the commission, the court finds the appeal was frivolous.

(F) All actions and proceedings for review pursuant to this chapter, and all actions and proceedings to which the commission may be a party and in which a question arises pursuant to this chapter or pursuant to or concerning any order or decision of the commission must be given priority of hearing in all courts and reviewing entities over all other civil causes except election cases irrespective of position on the calendar.

Section 59-150-310. (A) The commission may expend, pursuant to the provisions of this chapter, monies received from any source, including income from the commission's operations, for effectuating its purposes, including the payment of the initial expenses of organization, administration, and operation of the commission and the lottery.

(B) The commission must be self-sustaining and self-funded. Monies in the state general fund may not be used or obligated to pay the expenses of the commission or prizes of the lottery, and a claim for the payment of an expense of the lottery or prizes of the lottery may not be made against monies other than monies credited to the commission operating account.

(C) The commission may purchase, lease, or lease-purchase goods or services necessary for effectuating the purposes of this chapter. The commission may make procurements which integrate functions such as lottery game design, lottery ticket distribution to a lottery retailer, supply of goods and services, and advertising. In all procurement decisions, the commission shall act to promote and ensure security, honesty, fairness, and integrity in the operation and administration of the lottery and the objectives of raising net proceeds for the benefit of educational programs and purposes.

Section 59-150-320. To ensure the financial integrity of the lottery, the commission, through its board, shall:

(1) submit quarterly and annual reports to the Governor, the President Pro Tempore of the Senate, the Speaker of the House of Representatives, the State Auditor, the Comptroller General, the State Treasurer, and the Chairmen of the House Ways and Means Committee and the Senate Finance Committee disclosing the total lottery revenues, prize disbursements, operating expenses, and administrative expenses of the commission during the reporting period. The annual report additionally must describe the organizational structure of the commission, summarize the functions performed by each organizational division within the commission, and contain a detailed budget for the next fiscal year. The quarterly reports must be submitted within fifteen days of the end of the quarter, and the annual report must be submitted by October fifteenth;

(2) adopt a system of internal audits;

(3) maintain weekly or more frequently records of lottery transactions including the distribution of lottery game tickets or shares to a lottery retailer, revenues received, claims for prizes, prizes paid, prizes forfeited, and other financial transactions of the commission;

(4) authorize the State Auditor to contract with a certified public accountant or firm for an independently audited financial statement prepared in accordance with generally accepted accounting principles, to be submitted to the Comptroller General's office each year no later than October fifteenth. The certified public accountant or firm shall not have a financial interest in a lottery vendor with whom the commission is under contract. The certified public accountant or firm shall evaluate the internal auditing controls in effect during the audit period. The cost of this annual financial audit is an operating expense of the commission. The State Auditor may at any time conduct an audit of any phase of the operations of the commission at the expense of the State and shall receive a copy of the annual independent financial audit. A copy of an interim audit performed by the certified public accountant or firm or the State Auditor must be transmitted after the close of the commission's fiscal year to the Governor, the President Pro Tempore of the Senate, the Speaker of the House of Representatives, the State Auditor, the State Treasurer, the Comptroller General, and the Chairmen of the House Ways and Means Committee and the Senate Finance Committee;

(5) submit, for informational purposes only, to the Office of State Budget of the Budget and Control Board and the State Auditor by June thirtieth of each year a copy of the annual operating budget for the commission for the next fiscal year. This annual operating budget must be approved by the South Carolina Lottery Commission Board;

(6) submit, for informational purposes only, to the Office of State Budget on November tenth of each year a proposed operating budget for the commission for the upcoming fiscal year;

(7) adopt the same fiscal year as that used by state government; and

(8) authorize the Legislative Audit Council to contract with an independent firm experienced in security procedures including, but not limited to, computer security and systems security, to periodically conduct a comprehensive study and evaluation of all aspects of security in the operation of the commission and the lottery. This firm may not have a financial interesting a lottery vendor with whom the commission is under contract The cost of this evaluation is an operating expense of the commission. The commission shall pay directly to the Legislative Audit Council the cost of the evaluation.

Section 59-150-330. (A) All claimant agencies of this State and persons on whose behalf the State and its claimant agencies act, in conjunction with the commission, shall cooperate in identifying debtors who owe money to the State and who qualify for prizes pursuant to this chapter from the commission; and the sum of any debt owed to the State or to persons on whose behalf the State and its claimant agencies act must be set off against a prize awarded pursuant to this chapter. This section must be liberally construed to effectuate these purposes.

(B) As used in this section:

(1) 'Claimant agency' means any state or local agency, department, board, bureau, commission, or authority to which an individual owes a debt or which acts on behalf of an individual to collect a debt.

(2) 'Debt' means a liquidated sum due and owing a claimant agency, which sum has accrued through contract, subrogation, tort, or operation of law regardless of whether there is an outstanding judgment for the sum, or a sum which is due and owing a person and is enforceable by the State or any of its agencies or departments.

(3) 'Debtor' means an individual owing money to or having a delinquent account with a claimant agency, which obligation has not been adjudicated as satisfied by court order, set aside by court order, or discharged in bankruptcy.

(4) 'Prize' means the proceeds of a lottery prize awarded pursuant to this chapter.

(C) The collection remedy authorized by this section is in addition to and not in substitution for any other remedy available by law.

(D)(1) A claimant agency may submit to the commission a list of the names of all persons owing debts in excess of one hundred dollars to the claimant agency or to persons on whose behalf the claimant agency acts. The full amount of the debt is collectible from lottery winnings without regard to limitations on the amounts that may be collectible in increments through garnishment or other proceedings. The list constitutes a valid lien upon and claim of lien against the lottery winnings of a debtor named in the list. The list must contain the names of the debtors, their Social Security numbers if available, and other information which would assist the commission in identifying the debtors named in the list.

(2) The commission shall withhold winnings subject to the lien created by this section and send notice to the winner by certified mail, return receipt requested, of such action and the reason why the winnings were withheld. If the winner appears and claims winnings in person, the commission shall notify the winner at that time, by hand delivery, of the action. If the debtor does not protest, in writing, the withholding of the funds within thirty days of notice, the commission shall pay the funds over to the claimant agency. If the debtor protests the withholding of funds, in writing, within thirty days of the notice, the commission shall file an action in interpleader in the circuit court of the county in which the debtor resides, pay the disputed sum into the court, and give notice to the claimant agency and debtor of the initiation of the action.

(3) The liens created by this section rank among themselves as follows:

(a) taxes due the State;

(b) delinquent child support;

(c) delinquent student loans; and

(d) all other judgments and liens in order of the date entered or perfected.

(4) The commission is not required to deduct claimed debts from prizes paid out by a lottery retailer or entities other than the commission.

(5) A list of debtors and debts must be provided, pursuant to this section, periodically as the commission determines by rules and regulations, and the commission is not obligated to retain the lists or deduct debts appearing on the lists beyond the period determined by the rules and regulations.

(6) The commission may prescribe forms, propose rules, and promulgate regulations necessary to carry out the provisions of this section.

(7) The commission and a claimant agency do not incur civil or criminal liability for good faith adherence to the provisions of this section.

(8) The claimant agency shall pay the commission for all costs incurred by the commission in setting off debts in the manner provided in this section. The commission may retain this fee as part of administrative expenses.

(E)(1) Notwithstanding Section 59-150-240 or other confidentiality law, the commission may provide to a claimant agency all information necessary to accomplish and effectuate the intent of this section.

(2) The information obtained by a claimant agency from the commission pursuant to this section must retain its confidentiality and may be used only by a claimant agency in the pursuit of its debt collection duties and practices. An employee or former employee of a claimant agency who unlawfully discloses this information for another purpose, except as otherwise specifically authorized by law, is subject to penalties as provided by law.

(F) The provisions of this section apply to prizes of six hundred dollars or more.

Section 59-150-340. The net proceeds received from the state lottery for education as provided by law must be deposited by the State Treasurer in a fund separate and distinct from the state general fund entitled the 'Education Lottery Account'. All interest or income earned by the fund must be retained in the account and used for its stated purposes. However, all revenue received by the Education Lottery Account in any fiscal year together with earnings on it for that year must be disbursed as required by Section 59-150-350 and as appropriated by the General Assembly in its annual general appropriations bill or any bill appropriating monies for previous or current fiscal years. It is the intent of the General Assembly in creating this Education Lottery Account that its funds be managed so as to establish and fund these programs permanently. Upon receipt of monies transferred to the Education Lottery Account held by the State Treasurer, these monies must be appropriated by the General Assembly in its annual general appropriations bill or any bill appropriating monies for previous or current fiscal years to the programs and for the purposes stipulated in Section 59-150-350. The Comptroller General shall record these revenues received on a cash basis, and disbursements for the purposes provided also must be on a cash basis; however, unexpended funds at the end of a fiscal year after disbursement to the programs authorized to receive the funds as provided in Section 59-150-350 and as appropriated by the General Assembly in its annual general appropriations bill or any bill appropriating monies for previous or current fiscal years may be carried forward to future years and expended for the same purposes.

Section 59-150-350. (A) All lottery proceeds are the property of the commission, to be held in a separate and distinct account, apart from the State Treasury. Annual administrative expenses may not exceed fifteen percent of gross lottery revenues for the year, including lottery retailer commissions and incentives. The General Assembly shall consider, in the allocation of funds from the Education Lottery Account, the allocation of monies in the amount the General Assembly determines for the Commission on Higher Education and for the Administrative Law Judge Division, both to help defray their expenses incurred in the performance of their duties pursuant to this chapter; except that the amount of funding for the Commission on Higher Education and the Administrative Law Judge Division must be allocated by the General Assembly in its annual general appropriations bill or any bill appropriating monies for previous or current fiscal years. As nearly as practical, an amount no less than forty-five percent of the amount of money from the actual sale of lottery tickets or shares must be made available as prize money, except that this item does not create a lien, an entitlement, a cause of action, or other private right, and rights of holders of tickets or shares must be determined by the commission in setting the terms of its lottery or lotteries.

(B) Before the sixteenth day of each month, the commission shall deposit to the State Treasurer, for credit to the Education Lottery Account for the preceding month, the amount of all net proceeds from the preceding month. The State Comptroller General shall account separately for net proceeds by establishing and maintaining a restricted account known as the Education Lottery Account. Upon their deposit with the State, monies representing a deposit of net proceeds become the unencumbered property of the State of South Carolina and the commission may not agree or undertake otherwise. The monies may be invested by the State Treasurer pursuant to state investment practices. All earnings attributable to the investments are also the unencumbered property of the State and accrue to the credit of the Education Lottery Account.

(C) At the beginning of the first fiscal year after the state lottery becomes operational, the Comptroller General shall certify the amount of net proceeds including investment earnings on the net proceeds credited to and accrued in the Education Lottery Account during the preceding fiscal year. The sum of certified net proceeds and investment earnings must be designated as annual lottery proceeds. Appropriations from the Education Lottery Account must be allocated only for educational purposes and educational programs by the General Assembly in its annual general appropriations bill or any bill appropriating monies for previous or current fiscal years. Funds made available from the Education Lottery Account may not exceed the previous year's net proceeds and investment earnings as certified by the Comptroller General and first must be used to provide Palmetto Fellows Scholarships to all eligible applicants, then used to provide Life scholarships for eligible resident students attending two-year or four-year public institutions or technical colleges in those amounts provided by law, up to one percent of net proceeds to the South Carolina State Library for public library state aid, to be distributed to county public libraries on a per capita basis and to be used for educational technology delivery, upgrade, and maintenance, except that a public library that offers public access to the internet must use an internet screening or filtering program to receive this funding, and funding with all the remaining revenues for: elementary and secondary public education as determined pursuant to the Education Accountability Act of 1998 and education improvement legislation enacted into law after the effective date of this chapter, new programs enacted by the General Assembly for public institutions of higher learning, including public four-year colleges and universities and their branches and two-year colleges, as defined in Section 59-103-5, and state technical schools, which programs may include the creation of endowed chairs at the state's universities, with an emphasis in the areas of, but not limited to, engineering, computer science, and the sciences, and Youth Education Scholarships of up to and not to exceed one thousand dollars, to be determined in the annual general appropriations bill, to resident parents of a four-year-old who attains the age of four years by September first of the school year the scholarship is received and who attends a public or private, for profit or nonprofit kindergarten, preschool, home school, or child development center program provided in this State. The scholarship is payable from the lottery proceeds through the Department of Education directly to the school in the name of the attending child after the department confirms that the program meets the following criteria that include, but are not limited to, language and literacy programs that help the child understand and tell stories, recognize pictures and words, learn the alphabet, and understand that writing is communication; math concepts that teach the child to count and sort objects into groups, recognize shapes, and make comparisons of size, shape, length, and weight; science concepts that teach the child to explore the natural environment, observe seasonal changes, communicate observations, and use tools to measure; art concepts that help the child express ideas and thoughts in creative ways, paint, draw, and sculpt, listen to music and sing songs, and recognize colors; and physical development activities that help the child move with balance and coordination, participate in indoor and outdoor physical activity, and use writing tools, puzzles, scissors, blocks, clay, and computers. The proportion of total recurring general fund and special fund revenues of the State expended for the total of public elementary, secondary, and higher education allocations in any fiscal year may not be less than the proportions in the fiscal year immediately before the fiscal year in which education revenues are first received from a state lottery, and may not be reduced or supplanted later by revenues received from a state lottery.

(D) Appropriations by the General Assembly in its annual general appropriations bill or any bill appropriating monies for previous or current fiscal years for educational purposes and programs from the account not committed during the fiscal year must be credited to the Education Lottery Account.

(E)(1) A program or project started specifically from lottery proceeds may not be continued from the general fund, but the programs must be adjusted or discontinued according to available lottery proceeds, unless the General Assembly by general law establishes eligibility requirements and later appropriates specific funds within the general appropriations act. The provisions of this subsection do not prohibit the providing of supplemental funding to programs or projects in existence on the effective date of this chapter from lottery proceeds; provided, that funding for these existing programs or projects from the state general fund, the Education Improvement Act, or other nonlottery sources may not be reduced below that provided on the effective date of this chapter.

(2) A surplus in the Education Lottery Account may not be reduced by the General Assembly to correct any nonlottery deficiencies in sums available for general appropriations and vice versa, and a surplus in the Education Lottery Account may not be included in a surplus calculated for setting aside any nonlottery reserve, specifically, without limitation, the General Reserve Fund or the Capital Reserve Fund."

SECTION 3. Section 59-149-10 of the 1976 Code is amended by adding at the end to read:

"(E)(1) Beginning with school year 2002-2003, the annual amount of a LIFE Scholarship for eligible resident students attending a four-year or two-year public institution or technical college as defined in this chapter is increased to the cost of tuition for thirty credit hours a year or its equivalent plus a three hundred dollar a year book allowance. Tuition for this purpose means the amount charged for registering for credit hours of instruction and shall not include other fees, charges, or costs of textbooks except for the referenced three hundred dollar book allowance.

(2) Beginning with school year 2002-2003, the annual amount of a LIFE Scholarship for eligible resident students attending a four-year independent institution must be the cost of attendance up to a maximum of the average annual cost of tuition at the state's four-year public institutions of higher learning in the corresponding academic year, and the annual amount for eligible resident students attending a two-year independent institution must increase to the cost of attendance up to a maximum of the cost of tuition at a two-year regional public institution, both for thirty credit hours a year or its equivalent.

(3) Beginning with the school year 2002-2003, the requirement that high school completion be accomplished on or after May 1995, for eligibility for the LIFE Scholarship is waived."

SECTION 4. Section 59-149-50 of the 1976 Code is amended by adding subsections (D), (E), and (F) to read:

(D) Beginning with school year 2002-2003, an entering freshman at a four-year institution to be eligible for a LIFE Scholarship in addition to the other requirements of this chapter shall meet two of the following three criteria:

(1) have the grade point average required by this section;

(2) have the Scholastic Aptitude Test (SAT) or equivalent ACT score required by this section;

(3) be in the top thirty percent of his high school graduating class.

For home school students and students whose high school graduating class is less than fifty students, the Commission on Higher Education may define alternative criteria for students to meet the requirement of item (3).

After receipt of a LIFE Scholarship by an entering freshman beginning with school year 2002-2003, a student shall meet the criteria established in this chapter to retain or regain the scholarship.

For an exceptionally gifted student who is accepted into college without having attended high school, the Commission on Higher Education shall define alternative criteria for the student to qualify for a LIFE Scholarship.

(E) Notwithstanding the provisions of this section and the other requirements of this chapter, beginning with school year 2002-2003, students attending a technical college of this State taking not less than eighteen credit hours of instruction a year but less than thirty credit hours a year who are otherwise eligible for a LIFE scholarship shall receive a LIFE scholarship equal to one-half the amount that eligible students receive at the technical college who take at least thirty credit hours of instruction a year.

(F) In the absence of official school records to document the required grade point average for students attending a technical college, a satisfactory score on an admissions exam administered by the technical college is sufficient to meet the grade point average requirement."

SECTION 5. The 1976 Code is amended by adding:

"Section 59-149-56. Notwithstanding any other provision of law, students attending a technical college of this State after having received a GED certificate who have a 3.0 average on a 4.0 scale after the first semester meet the requirements for receiving a life scholarship under this chapter."

SECTION 6. Section 12-36-110(1) of the 1976 Code is amended by adding an appropriately lettered subitem at the end to read:

"( ) sales of lottery tickets pursuant to Chapter 150 of Title 59."

SECTION 7. The 1976 Code is amended by adding:

"Section 2-15-63. (A) Beginning in December 2004 and every three years after that, the Legislative Audit Council shall conduct a management performance audit of the South Carolina Lottery Commission. The cost of this audit is an operating expense of the commission.

(B) Nothing in this section limits, abridges, or otherwise affects the provisions of Section 2-15-60.

(C) The Legislative Audit Council may contract with an independent firm experienced in security procedures including, but not limited to, computer security and systems security, to periodically conduct a comprehensive study and evaluation of all aspects of security in the operation of the commission and the lottery. This firm may not have a financial interest in a lottery vendor with whom the commission is under contract. The cost of this evaluation is an operating expense of the commission. The commission shall pay directly to the Legislative Audit Council the cost of the evaluation."

SECTION 8. Section 12-36-2120 of the 1976 Code is amended by adding an appropriately numbered item to read:

"( ) a lottery ticket sold pursuant to Chapter 150 of Title 59;"

SECTION 9. Section 59-63-210 of the 1976 Code is amended to read:

"Section 59-63-210. (A) Any district board of trustees may authorize or order the expulsion, suspension, or transfer of any pupil for a the commission of any crime, gross immorality, gross misbehavior, persistent disobedience, or for violation of written rules and promulgated regulations established by the district board, county board, or the State Board of Education, or when the presence of the pupil is detrimental to the best interest of the school. Every Each expelled pupil shall have has the right to petition for readmission for the succeeding school year. Expulsion or suspension shall must be construed to prohibit a pupil from entering the school, or school grounds, except for a prearranged conference with an administrator, attending any day or night school functions, or riding a school bus. The provisions of this section shall do not preclude enrollment and attendance in any adult or night school.

(B)A district board of trustees shall not authorize or order the expulsion, suspension, or transfer of any pupil for a violation of Section 59-150-250(B)."

SECTION 10. Except for Section 59-150-350(C), (D), and (E), provisions of this chapter relating to guidelines for the appropriation of lottery proceeds must not be amended in a general appropriations act, but only in a separate piece of legislation solely for that purpose and by a majority vote of those present and voting in both houses of the General Assembly.

SECTION 11. The General Assembly shall review and evaluate, on a regular basis but at least biannually, the operation of the South Carolina Education Lottery and the success and efficiency with which the South Carolina Lottery Commission has undertaken that responsibility. The General Assembly, after each review and evaluation, may determine to:

(1) transfer the whole or any part of the functions of the commission to the jurisdiction and control of any other agency;

(2) consolidate, coordinate, or combine the functions of the commission with any other agency;

(3) redirect any mission of the commission;

(4) abolish any mission of the commission in whole or any part; or

(5) abolish all or any part of the functions of the commission.

SECTION 12. Criminal penalties contained in Chapter 150, Title 59 apply only to offenses committed on or after the effective date of this Act.

SECTION 13. The repeal or amendment by this act of any law, whether temporary or permanent or civil or criminal, does not affect pending actions, rights, duties, or liabilities founded thereon, or alter, discharge, release, or extinguish any penalty, forfeiture, or liability incurred under the repealed or amended law, unless the repealed or amended provision so expressly provides. After the effective date of this act, all laws repealed or amended by this act must be taken and treated as remaining in full force and effect for the purpose of sustaining any pending or vested right, civil action, special proceeding, criminal prosecution, or appeal existing as of the effective date of this act, and for the enforcement of rights, duties, penalties, forfeitures, and liabilities as they stood under the repealed or amended laws.

SECTION 14. If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, such holding does not affect the constitutionality or validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this chapter, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective.

SECTION 15. A statewide advisory referendum shall be held at the same time as the November 2004 general election as to whether or not the qualified electors of this State want to continue a State Education Lottery. Ballots must be provided at the various voting precincts with the following words printed or written on the ballot:

"Do you favor continuing the Sate Education Lottery?

Yes [ ]

No [ ]

Those voting in favor of the question shall deposit a ballot with a check or cross mark in the square after the word 'Yes', and those voting against the question shall deposit a ballot with a check or cross mark in the square after the word 'No'."

The results of the advisory referendum shall be reported by the State Election Commission to the General Assembly and the Governor in January 2005. The cost of this statewide advisory referendum shall be paid by the State.

SECTION 16. This act takes effect upon approval by the Governor.

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